EMEA Server Market in 3Q06 Exhibited Positive Revenue Growth for First Time in 12 Months as Midrange and High-End Segments Show More Dynamism, Says IDC

LONDON – NOVEMBER 28, 2006 – According to IDC's Quarterly Server Tracker, EMEA sales of servers in 3Q06 posted positive annual growth in both revenue and units for the first time in a year, partly due to renewed mainfraime and RISC upgrade activity across multiple sectors in Western Europe. The year-on-year revenue growth rate hit the 5% mark to total $3,926 million, with shipments growing a moderate 1% over the same period a year ago, to 558,000 units. This trend reflects a positive departure from a 2006 server landscape of shrinking ASPs and negative revenues in a unit growth market.

A closer analysis by sub-region reveals changing market dynamics. Western Europe exhibited the biggest revenue growth in two years, with sales reaching $3,239 million. "The last time the Western European server market showed a revenue growth of 5%, shipments increased 20% simultaneously, whereas this quarter revenues went up in an environment of flat unit growth, signaling wider profit margins and a stronger market," said Beatriz Valle, IDC research analyst.

Central and Eastern Europe, a market that until now showed unabated momentum, displayed marginal revenue decline, with sales decreasing by $1 million despite 9% growth in shipments. According to Stefania Lorenz, IDC program manager, "Historically, server infrastructure in the CEE region has been dominated by x86 server deployments and is less impacted by upgrade activities currently taking place in the RISC and CISC segments." The Middle East and Africa recorded an annual server revenue growth of 6%, boosted by strong growth in the midrange and high-end segments, while total shipments declined by 10%.

"Overall, this confirms our predictions that the volume segment, which has been a key market driver during the present year, will exhibit signs of stagnation in 2007. At this stage we will see higher-end systems making a temporary comeback, thanks to a lot of mainframe and RISC upgrade activity, notably in the finance, government, and healthcare sectors in Western Europe, especially the U.K.," said Nathaniel Martinez, IDC program manager.

IDC Top Server Market Findings

Sales of high-end enterprise servers generated $854 million, a 14% increase over the year-ago period. Revenue from the volume segment grew just 1%, while midrange systems experienced partial recovery with annual growth of 5%.

Windows continues as the top operating system, with 35% of revenue, one point ahead of Unix. Both operating systems have quasi-flat revenue growth compared to the same quarter last year, while Linux, which keeps its 12% share of the market, grew 23% over the year-ago period.

Revenue from x86-64 bit systems grew 64% annually, reaching a market share of 46%, with $3,926 million in sales. This type of system showed spectacular growth, particularly outside Western Europe.

Blade servers saw their revenue go up 45% from $158 million in 3Q05 to $229 million this quarter, increasing their market share to 6%. Non-rack servers remain at the top with 51% of total sales.

Opteron grew 147% annually but was outperformed by PA-RISC with a spectacular rate of 250% sales growth over the year-ago period. Sun's SPARC IV also did well with an increase of 56%.

IDC Market Findings by Vendor

Thanks to the z Series, IBM regained the top revenue position in EMEA and is now ahead of HP with an additional 3% market share. The p Series also did well with a revenue growth of 18%.

Integrity proves its potential for HP with an annual revenue increase of 25% and a 12% share of the vendor's total sales, while sales of Proliant servers grew by 4%.

Sun continues its comeback with revenue from high-end Ultra servers growing 98%. The SunFire line went up 27% in sales over the year-ago period.

As the only pure x86 top tier player, Dell increased its revenue by 7% but lost its fourth position held in the last quarter to Fujitsu Siemens by just $3 million in sales.

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